Homeowners that are in the midst of a short sale or anticipating selling their home short this year can utter a sigh of relief that the Mortgage Forgiveness Debt Relief Act of 2007 has been extended to December 31, 2013. It has survived the Fiscal Cliff!!
Homeowners who experience a reduction in the principal amount of their mortgage through a short sale or even a deed in lieu will now not have to pay income tax on the amount that has been forgiven. In order for homeowners to qualify for this Mortgage Forgiveness Debt Relief Act, the mortgage must have been on their principal residence.
The amount forgiven must be $2,000,000 or under.
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